Creating strategic alliances through the combination of co-branding has become increasingly popular in all kinds of industries. Years ago, computers from different brands together with Intel revolutionized electronics. The “Intel Inside” logo was a model of worldwide success, under the strategy of what we know as ingredient brand. However, in 2006 Intel announced a radical change of approach to regain control of its brand. Not only would it provide the technology, but it would also market computers. It ceased to be an ingredient brand and became a brand with autonomy on its own. Recently, Apple has announced that the next versions of its computers and devices will stop using Intel processors and will start incorporating their own processors, in a clear strategy to capitalize on prominence and absolute power. About your brand, and about customers.

The general concept of co-branding is attributed to a strategic alliance between different brands that complement each other to achieve certain objectives, which can range from more tactical to more strategic. Their strategy is to aggregate the equity of each brand and improve the success of the overall product.

6 COBRANDING MODELS

We can find different co-branding models, depending on the type of relationship between the brands:

  1. Punctual agreement

The Ad Hoc Agreement is usually for tactical or promotional reasons and represents a lower level in the relationship between brands.

Example: Limited edition Martini Gold bottle.

  1. Logo Licensing

It can make it possible to take advantage of the image/reputation synergies of both brands respectively, as a result of the sum of each of the product or service offerings, allowing the controlled use of the brand in complementary, or even totally different, contexts.

Ejemplo: McDonalds McFlurry with Oreo or Kit Kat

  1. Ingredient Branding

Ingredient brands complement other brands without conflicting, reinforcing the perception of quality. Their value-added message is conveyed directly to the brand they are on. In turn, the resulting products benefit from the association with the ingredient’s brand and presumably the consumer gets a better product.

Example: Patagonia

and Polartec’s technical fibers

  1. Alliance

The alliance (designed for the long term) facilitates the realization of joint operations that involve a high degree of ambition and commitment. It is part of joint business strategies.

Example: British Airways and the oneworld®alliance with 14 other of the world’s leading airlines.

When one of the two brands leads the operation, then it is defined as a dominant alliance.

Example: Oral-B and Braun.

  1. Endorsement

The endorsement strategy is made up of individual and distinct product brands that are linked together by an endorsing parent brand. The endorsing parent brand plays a supporting or collateral role for the other brand. It can be strong or weak, depending on the degree of relationship in the presentation of both brands.

Example: Sony Pictures would be a strong endorsement, while Vaio (of Sony) would be a weak endorsement.

On the other hand, from the perspective that people can also be brands, the endorsement with celebrities allows the celebrity to act as a spokesperson for the brand, certifies a certain positioning and extends their personality towards the brand.

Example:
Pepsi with Beyoncé

  1. Fusion

It can be the result of any of the above agreements or a merger or acquisition between companies (M&A). Mergers can be divided into three categories based on their brand strategies:

  • Assimilation, which includes organizations that retain the name and logo of one of the original companies and discard those of the other, as Pfizer did when it took over Warner-Lambert.
  • Respect, to identify those cases in which each company kept its name and logo. For example, when Procter & Gamble bought Gillette.
  • Merger, to describe organizations that used branding elements from both companies, either by combining the two names (as at JPMorgan Chase) or by taking one company’s name and the other’s logo (Boeing kept its name but adopted the McDonnell Douglas logo).

Exceptionally, there are other formulas such as when merging companies opt for an entirely new name, as GTE and Bell Atlantic did when they merged to form Verizon.

KEY ASPECTS IN A CO-BRANDING STRATEGY

Any of the models described is not exempt from risks that can lead to unexpected failures: dispersion of positioning, phagocytosis, ineffective marketing, higher costs, divergent strategies between allied brands, irrelevance of the offer, lack of coordination, disappointment…

As far as the management of the brands that may be involved is concerned, it is important to check the following aspects:

  • The compatibility of the values and personality of each brand.
  • Consistency in the strategic objectives of each brand.
  • The right symbiosis of products or services.
  • The company culture of each brand.
  • The relevance of the final product or service to the target audience.
  • The division ofresponsibilities and competencies.
  • The duration of the agreement.
  • The differentiation of the resulting product or service
  • Character compatibility among business leaders.
  • The clarity and balance of the agreement

COBRANDING GUIDELINES

It is important, therefore, to carefully consider your own principles for minimizing risks. To this end, it is desirable to develop appropriate guidelines to objectively assess potential opportunities. Large companies have established formal guidelines for this purpose, such as AT&T that it has even put on its intranet a tool of “Co-Branding Decision” to help guide managers through a variety of decision factors related to co-branding opportunities and the different ways to approach it.

In addition, it is necessary to define and guide the provisions relating to the appearance and prominence of the respective trademarks (i.e. location, colour, size, proximity).

 

Co-branding is an often underconsidered strategy, but when done in the right way it shows that one plus one can be more than two with the ability to generate a new level of interest and excitement around brands.

 

Carlos Puig Falcó

CEO of Branward

Photos: Shutterstock